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James Pethokoukis is a columnist and blogger at the American Enterprise Institute. Previously, he was the Washington columnist for Reuters Breakingviews, the opinion and commentary wing of Thomson Reuters.

The sickly, stagnant September jobs report

Only in an era of depressingly diminished expectations could the September jobs report be called a good one. It really isn’t. Not at all.

1. Yes, the U-3 unemployment rate fell to 7.8%, the first time it has been below 8% since January 2009. But that’s only due to a flood of 582,000 part-time jobs. As the Labor Department noted:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

2. And take-home pay? Over the past 12 months, average hourly earnings have risen by just 1.8 percent. When you take inflation into account, wages are flat to down.

3. The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market.

4. The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where’s the progress? Here is RDQ Economics:

Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%). We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility). Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline.

5. As the chart at the top of the post shows — a chart originally produced by Team Obama — even the artificially depressed 7.8% unemployment rate is way above the 5.6% unemployment rate the White House predicted for September 2012 if Congress passed the $800 billion stimulus package back in 2009.

6. The 114,000 jobs created would have been a good number … but for 1962, not 2012. The U.S. economy needs 2-3 times that number every month to close the jobs gap (which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.) At 114,000 jobs a month, the jobs gap would not close until after 2025, according to the Hamilton Project.

7. We are still on pace to create fewer jobs this year than last year. In 2012, employment growth has averaged 146,000 per month, compared with an average monthly gain of 153,000 in 2011.

8. White House economist Alan Krueger says the jobs numbers are “further evidence” the economy is healing. But he’s wrong.

The employment-population ratio, which merely shows how many folks have jobs as a share of the civilian population, was 58.7%. Now that’s up from last month. But it is still far below where it was in June 2009, 59.4%,when the recession officially ended. And it’s even further below the 63% level before the downturn.

Bottom line: The U.S. labor market remains in a deep depression with virtually no recovery since the official end of the Great Recession. But the Long Recession continues unabated.

James Pethokoukis is the Money & Politics columnist-blogger for the American Enterprise Institute. Previously, he was the Washington columnist for Reuters Breakingviews. Pethokoukis has written for many publications including USNews & World Report, The New York Times, The Weekly Standard, Commentary, USA Today, and Investor’s Business Daily. Pethokoukis is also an official CNBC contributor. In addition, he has appeared numerous times on MSNBC, Fox News Channel, Fox Business Network, The McLaughlin Group, CNN, and Nightly Business Report on PBS. A graduate of Northwestern University and the Medill School of Journalism, Pethokoukis is a 2002 Jeopardy! champion.

I think it is time that the Government revise how these numbers are calculated or at least become more transparent. It is stunning to see unemployment drop .3% when we all know the economy isn’t healing. I know you can slice and dice any way you want but I think Romney and Ryan need to start explaining this to the American People that don’t follow how these numbers work. They hit MSNBC or CNN and see unemployment at lowest levels in 4 years without seeing how that number was derived. Considering such a huge number were part-time or seasonal that needs to be stressed.

In future debates I would honestly love a candidate be able to have a powerpoint presentation. Take this report. Everyone sees 7.8% Have Romney with the U-6 portion which explains what is going on. Have him with the breakdown of men, women, various minority groups and say is the country getting better, stagnating or getting worse? Americans aren’t stupid if given the facts. But if you just give one of a thousand numbers and say look, it is great, then we lying to the American people.

114,000 new jobs is a bad number. It’s not enough to keep up with population growth. The fact that the UE rate went down by such a huge margin reeks of major changes in the way calculations are made at BLS – in short, corruption by the same administration that gets and ignores contempt of court orders, has the worst FOIA record of any Administration, lies about terrorist attacks, covers up fast and furious, disregards separation of powers, and tells companies to break the law by ignoring the WARN Act, promising funds to induce this lawbreaking, in violation of the anti-deficiency act.

MAX Planck I don’t comment on blog sites but I had to this time. You must hate life just slamming anything someone comments on. You don’t have to agree. Make your point and move on. You’ve been on here for hours since you first posted at 9 am with the latest after 2 pm. It sounds like you are harboring some pain man!

This is an interesting comment because it demonstrates a profound degree of ignorance and a truly stubborn kind of blindness.

You’re cowardly implication above suggests that Mr. Pethokoukis specifically, and I assume Conservatives/Republicans generally, “use” BLS statistics as unimpeachable measures of truth when it suits his/our purpose, but discount them when they appear to offer evidence of “things” we don’t like (ostensibly, you’d charge, “we” don’t want to see the unemployment rate drop because Barack Obama’s in office).

Nothing could be farther from the truth. In fact, here’s what Mr. Pethokoukis had to say all the way back in Aug. of 2012:

“And if the size of the U.S. workforce, as measured by the Labor Department, had stayed constant since April—instead of shrinking by a million—the unemployment rate would be 10.4 percent.” –http://www.weeklystandard.com/articles/obamas-bad-bets

Same logic and method of data analysis applied then as today. Again, in fact, we’ve been pointing out this exact kind of manipulation of the BLS statistics on a continuing and perpetual basis for years. Why? Because we see the manipulation when we look at the data! That’s one of the primary diffrences between one side of these discussions and the other. You don’t need to look deeper — if the news is already bad from your perspective, then looking deeper only gets more depressing because all you really care about in your cult of personality and preserving “His” image as the patron saint of all Leftist ideologies from Marxism to Fascism and everything in between

You apparently see 7.8% and don’t feel any obligation what that number means, represents, or is arrived at. So, as when the news is bad in your view, when the news is good looking deeper actually introduces the risk that you’ll come face to face with the manipulation — which your fragile world-view couldn’t survive.

Were the numbers worse, we’d still be pointing out how the official statistical measure nonetheless understates the depth of the problems our economy is facing, and how the numbers are still dishonest and manipulated. As it happens, we’re still showing you “PROOF” that recovery is being hampered by Democratic economic policies as we make a very solid case pertaining to the politically-motivated manipulation of information by a regime desperate to hold on to power.

And you have the temerity to project your own dysfunctions (I.E. tendency towards self-deception) onto Mr. Pethokoukis???

“You’re cowardly implication above suggests that Mr. Pethokoukis specifically, and I assume Conservatives/Republicans generally, “use” BLS statistics as unimpeachable measures of truth when it suits his/our purpose, but discount them when they appear to offer evidence of “things” we don’t like”

I wasn’t “implying” it at all. Its the truth.

Your statement is nonsense. The BLS sticks to a certain methodology, no matter who is in office, or who is making policy. I never assume the numbers provided are drop dead accurate, because obviously, we can’t ask every single employer in the nation how many people they hired. That doesn’t mean they’re manipulated, or suddenly untrustworthy.

The numbers are not “manipulated.” The BLS deploys its methodologies and metrics on a consistent basis.

More to the point, yes, our unemployment problem is not solved with this report. But it IS a positive one, and the upward revisions to last month are also positive.

Your accusations of “manipulation” are baseless.

Moreover, this statement is nonsense to even an amateur statistician:

““And if the size of the U.S. workforce, as measured by the Labor Department, had stayed constant since April—instead of shrinking by a million—the unemployment rate would be 10.4 percent.”

The size of the US workforce NEVER “stays constant.” This is facile horsecrap. But this is the kind of duplicity Mr. Pethokoukis consistently deploys. I even wish he was better at it, because his efforts are so obviously strained.

In any case, your draft dodging, tax evading Prince of Plutocrats is dead on arrival. Take that!

Your manipulations and the BLS’s are transparently obvious. The fact that your mental manipulation methodologies and their statistical-fraud “methodologies” are deployed “on a consistent basis” means nothing but that you’re both consistent manipulators. “Consistency” is merely the color of justification; con men are consistent too.

It is manipulation to evade counting as “unemployed” those who have given up looking for work because they’ve given up hope that there’s any work out there — THESE DROPOUTS ARE STILL UNEMPLOYED, fuckwit. Yet the BLS’s BuLlShit methodology doesn’t “count” them as unemployed — a subtle manipulation the public can’t keep up with. That’s manipulative. Got it, con man!

What’s finally proves conclusively that you’re a sneaking eggsucker with not one honest bone in your body from tip to toe is your patently phony excuse that “the size of the US workforce NEVER stays constant” — as if that were not PRECISELY OUR POINT!! — it has been constantly changing FOR THE WORSE under Obomination. Or as if it didn’t matter not only (1) which way that size is heading — DOWN DOWN DOWN under Obomination, but also (2) that this changing (i.e. shrinking) size didn’t render the Bulls**t Labor Statistics “methodology” and output even more outrageously manipulative, enabling Obomination to hide the true dimensions of his disastrous economic policies.

Nice try, slick.

Oh and by the way, pLunCk, your kind is never more manipulative than when faking up “polls” that oversample Democraps, some to such a ludicrous extent that it would take a Democrap turnout in this election HIGHER THAN THE 2008 turnout to match the poll results. Yeah, right. See you on Election Day, jerkoff.

You know what else, Punk? A tinfoil hat would actually be a step up for you — it would hide your flat forehead. Go Heil Der Fuehrer all you want, your kind can’t win THIS election unless you STEAL it.

I am certainly not alleging cooking of the books, but please explain to me why you trust the government not to cook the books if you do not trust businesses to cook the books? I think with the government’s entitlement and baseline accounting, it is pretty clear that the government is no more trustworthy than business to be completely self-monitored.

Sir, I trust the statiticians at the BLS, most of whom are career people, and whose current leader is a Republican appointee. This idea of manipulation is one of utter desperation. You people thought that the debate tanked Obama (although polls said otherwise) and you saw a glimmer of hope. Now you have upward revisions all over the place, and it’s driving you all nuts.

Max, you forget we are in the “silly season” when no government statistics can be trusted, for purely political reasons. This year they are starting early so Obama can crow for a whole month that his policies are working, which just makes a lie based on a lie. Expect the revision in late November, when BLS backtracks on its absurd “seasonal” and other non-valid adjustments. This is 1992 all over again…

Start thinking for yourself, use some logic and common sense and stop drinking the kool-aid, stop using the given talking points and you too will come up with your own doubts about this whole thing called the “administration”.

Thank you for this well-reasoned factually supported information report.

Some of the other user comments demonstrate how Leftist Democrats resort to ad hominen attacks and name-calling because they have no facts and logic to support their position, and they prefer to be intellectually dishonest than to admit they and their party and candidate (Obama) are dangerously wrong.

That being said, Obama’s manipulation of the U-3 data is another possible reason for the decline in the less useful U-3 unemployment statistic, while the more important U-6 statistic remained the same at 14.7%.

Obama, acting like an Imperial President and legislating from the White House, in violation of the Constitution and government Separation of Powers, ordered that the Welfare Reform Act requirement for welfare takers to look for work be dropped and no longer enforced.

That Obama manipulation would decrease the U-3 but not the U-6 unemployment statistic.

Even though I was a Democrat, I can see the real situation around me- all the people I know who were unemployed or underemployed remain the same and some have just stopped looking. Not all Democrats lie:) To majority of us Americans-Democrats, Republicans or Independents, numbers dont really matter- botched or otherwise. We just want to see the country grow stronger. Sad to say that will not happen under the current administration.

“Each year, the Current Employment Statistics (CES) survey employment estimates are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. For National CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus three-tenths of one percent of Total nonfarm employment. The preliminary estimate of the benchmark revision indicates an upward adjustment to March 2012 Total nonfarm employment of 386,000 (0.3 percent).”

Maybe I’m a moron, but how does total employment rise by 873,000 when only 114,000 jobs were added to the economy? What does that even mean? And where did all these miraculous jobs come from, 35 days out from the election? If almost a million more people are working now, who hired them?

I got a Obama Job – Every morning I dig five holes in my backyard. In the afternoon I re-fill these holes. To make sure I’m being productive I dig and fill different holes everyday. The pays not great, but…..!! What a country!!

Anyone that believes the validity of the published employment number is a mouth-breather!!

Is there any chance you didn’t write your statement a few days ago and simply hit post today.

whether he has a soul or not or whether James loves or hates the administration has nothing to do with his post or article. He cited a series of numbers and drew conclusions from those numbers. if you say his numbers are wrong–show your math. if you say his number are right but his conclusions are wrong–say as much–with a logical explanation.

I seriously doubt he wrote his post a few days ago because nobody expected this bull roar of a jobs report we got.

And why do the Republicans, never seem to remind the people that Jan 2007 is when the Democrats took over full control of the house and Senate and in jan 2009 they had control of all 3 branches, that’s right when everything crashed… Get it out there, the people forget all too quickly …

Because the roots of the crisis were not formed in January 2007, (which is when things began to get wobbly in housing) and it is the height of stupidity to think you can pull out a stopwatch and time the crash to the moment one person or the other took power. Its a dumb argument, made by dumb people. Pure internet garbage.

Fannie was the epicenter…HUD and the the now governor of NY were the catalysts. HUD’s quotas (70%) home ownership) displace traditional lending criteria with a social agenda. Throw in a little community Reinvestment Act as amended by Bill Clinton in 1995, The croaking of Glass-Steagal in 1999 and wrong headed interest rate policies by a fed that kept rates too low for too long and you have KAAABOOOM!

Cherry picking history will get you nowhere–I only provided the short-list.

Sir, once again, your narrative is nonsense. As constant followers of this board should know by now, CRA, nor Fannie or Freddie had anything to do with the housing crisis, but the lie is so widespread, people who follow this site because it confirms their prejudices are already brainwashed.

MacDaddy Watch you nailed it exactly. All democrat policies, Community Reinvestment Act signed by Carter and put on steroids by Clinton. The main fault of the Republicans is they complained and were pushed back by Maxine Waters, and other dems, and the Republicans didn’t fight hard enough for what is right. Term limits is the answer.

And Einstein, please drop the “cut and paste” and learn to think on your feet. The market–the overwhelming majority of market indexes–says that your very bullish spin in the September is all HOGWASH. It says that you are wrong.

Hey, Max, your ignorance and arrogance (what a combo!) are stunning. I notice you never actually engage Jim’s arguments in the article. And fortunately for you, he’s got enough class not to come on the board and kick your sorry arse to the curb where it belongs.

I engage Jim with almost each piece he writes, and NONE of the authors ever mix it up with the comments posted on this board. Not that I blame him, since most of of the posters are flaming idiots.

What Jim spend Friday doing- presumably when he wasn’t counting the remainder of his Xanax supply- was trying to hose down what was a nicely positive jobs report. The upward revisions for prior months were welcome and the current month’s stats were good too. We’re in an upward trend, and for that, we should be happy. I am happy for anyone whose dignity and income is restored by his labor.

As for “Jim,” he is a paid demagogue, and little else. If he’s so confident in his assertions, I’m here.

One reads stories about how the campaigns have people who’s job is to monitor the blogs and put spin on what’s being said, but until I’d read some of the comments here I don’t believe I’ve ever seen a paid troll in the wild. Now I’m certain I have.

So if the 582,000 are part timers who might be working just one day or only one week per month, then their incomes are not growing and their spending will likewise lag. The bottom line is that the September jobs report is nothing more than a statistical event that will not contribute to economic growth–it will not buoy the “virtuous cycle” of economic growth: more jobs…more incomes…more spending…more business expansion and …more jobs…etc.

A perfect example of Twain’s quote: “There are three kinds of lies: lies, damned lies and statistics.” When the Dept of Labor is willing to lie to help the re-election of Dear Leader, maybe it’s time to eliminate that department. If their numbers are simply based on who is in office and when the next election is taking place, there really is no reason to have the numbers at all.

Someone has obviously hacked into your site and replaced it with an article from The Onion.

This can’t be about this morning’s job numbers:

Washington Post:

By Neil Irwin, Updated: Friday, October 5, 11:50 AM

The job market is finally showing some juice.

The unemployment rate fell to 7.8 percent in September, the Labor Department said Friday, from 8.1 percent in July, its lowest since January 2009. It is a surprising show of improvement in a job market that had seemed listless in recent months. Unlike in August, the number improved for the right reasons: Not because people gave up looking for jobs, but because far more people reported having one.

Employers reported creating 114,000 jobs in September, almost identical to analysts’ forecasts, but revisions to data from July and August brought improvement of that measure of the job market as well.

Add it up, and what had seemed to be a summer lull in employment increasingly appears not to have been much of a lull at all.

While it is that headline number — the drop in the unemployment rate — that will surely capture the most attention in the final weeks of a hard-fought presidential campaign, if anything the inner details of the survey on which it is based reveal an even rosier picture.

The unemployment rate fell despite more people — 418,000 of them — entering the labor force. That brought the ratio of the American population with a job to its highest level since May 2010. Some 873,000 more Americans reported having jobs in the survey of households, and 456,000 fewer reported not having a job but wanting one.

The timing was fortunate for President Obama’s reelection campaign, with the most closely followed barometer of economic health, the unemployment rate, falling back to the level it was when he was inaugurated.

Obama appeared buoyant as he touted the report during a late morning campaign event in Northern Virginia. “This morning we found out the unemployment rate has fallen to the lowest level since I took office. More Americans entered the work force, more people are getting jobs,” the president said during a rally at George Mason University. “Now, every month reminds us we’ve still got too many of our friends and neighbors looking for work, too many middle-class families struggling to pay the bills.”

No they don’t…they a few hundred and then their very powerful and magical statical models do the rest. Take a look at the household data versus the enterprise data over a long duration time. The household data looks like the EKG of a hummingbird.

Something like 50,000 households are polled- both by telephone and by census interviewers. The 873,000 number is extrapolated from the data resulting from the household polling. BLS will tell you that the small sample size will result in some error, and that you need to look at several months of data to see what the trend is. A single month data point doesn’t mean anything.

Substitute Bush for Obama in all of these discussions and imagine the reaction of the MSM to this latest “good” news. Bush was hammered when the unemployment rate was 5.2% and heading down. This is a case of who’s ox is being gored. The press is the same with gas prices. Just recall the sob stories that were highlighted when gas was $2.00/gallon under Bush. It was the end of the World. Now, hey, no one even notices it’s $4/gallon. Really? In what alternate universe?

Ummm, thinking about what those 500,000+ part time jobs might by the only thing It can probably be are the College students going back to school and working in the cafeteria, student hall or student housing to help pay for their tuition. Who else would hire those numbers this time of year? So are they really jobs or is this more smoke and mirrors from an empty presidency. Why can’t these people be honest?

I don’t see how there are 500,000+ part time self reported jobs created in September – far in advance of the Christmas season. What industry hires that amount of new PT hires before the holiday season? Retail is the only industry that could. I could understand these numbers in november or December but not September and October. Something is fishy.

But this fails to show that corporate after tax profits are up near 2.6 times from what they were at the end of the Q4 in 2008 and the S&P is up over 70% for the same time period. Apparently companies are making money, they’re just not spending it on hiring workers or giving raises to their employees.

Those part time jobs “created” can actually represent full time employment moving to part-time employment rather than actual new jobs. If you look at part time employment data versus total employment data going back several decades, there have been times when part time jobs created have been greater than change in total employment; the only explanation is shifting from full time to part time.

@David E,

Companies are indeed making money. But with an uncertain regulatory framework (does anyone REALLY know how Dodd-Frank works?) and the Fed announcing unlimited QE, there’s no reason for companies to invest domestically.

I’m sure you were concerned about the rising deficit and unemployment rate for the 8 years Bush was in office!! (sarcasim of course)But like all good Republican sheeple, I’m positive you sat there on your “sickly” butt making excuses for his actions while that administration destroyed this country’s economy!!!!!